At the end of 2021 a study showed that 51% of US households are at risk of not sustaining their pre-retirement income in retirement. You might say that isn’t an issue, because your expenses will be lower. Maybe you don’t have a mortgage, the kids are out of the house, you will not have a commute etc. While those things are true, what about travel, seeing children and grandchildren? Do you plan to enjoy your life or just sit around the house not doing much? Even if you don’t have expensive tastes, you will eventually have some health issues and you will want to make sure you have enough money to take care of yourself.
Another shocking statistic, according to a US government study in 2019 is that only 55% of households ages 55-64 have any kind of retirement savings account. I have found that most people in that age range have below $100,000. It is estimated that by 2050 there could be a $130 trillion savings gap in the US. This means people will outlive their savings by 10-20 years. That’s dangerous!
Fortunately, there are ways you can catch up and even get ahead. If you have a work retirement plan, you can not only make contributions that get you a match, but you can also add catch up contributions if you are over the age of 50. This means that you can put away more money tax deferred and potentially even more into Roth accounts for future growth.
One of the issues plaguing so many Americans is significant debt. Whether it’s a result of borrowing to go to college or just the fact that we have so many fun things to buy, not to mention inflation.
It’s so important to have a budget and look for ways to allocate your money more efficiently. People find it enlightening and often surprising when they actually look at where their money is going. You may not realize that eating out is costing you $500 per month or those subscriptions are over $200. Perhaps your car or home insurance isn’t as efficient or cost effective as you thought. There are a lot of ways you can find to reallocate your budget to savings and the first one is to pay yourself first.
Working with a financial advisor can be a big benefit for so many people. We are able to help you take an inventory of where you are and show you a path to where you want to get to. In the end, it’s your values that are the most important and you want to make sure you are deploying your assets in the most efficient way to make sure you are going to meet your goals. Maybe it’s ways to pay less taxes or put money away for children. Perhaps you don’t have enough life insurance or the investments you have aren’t as efficient as they could be. Putting together a plan and being intentional with your money can make a world of difference.
Reach out if you would like to talk more about ways that will help you meet your goals.
Disclaimer: This article is for information purposes only and is not tax, legal or financial advice. Every person’s financial situation is different, so make sure you have an advisor that will tailor a plan to meet your needs.
Contact Red Barn Financial at 615-619-6919 or smoran@redbarnfinancial.com